Interview with his Excellency Horacio Cartes, President of the Republic of Paraguay

Since you became President in 2013, what do you consider to be your key achievements in taking Paraguay in a new direction and implementing your reform agenda?

When I began my Presidency we set three main goals for this term in office. The first aim was to drastically decrease the poverty levels in Paraguay, the second aim was to achieve strong economic growth through social inclusion, and the final aim was the total opening of Paraguay and the Paraguayan market to the outside world. Today almost two years later I can say I am happy with the results of the second and third aim, but there is still work to be done in terms of reduction of poverty levels. There have been some notable successes; total poverty has been decreasing steadily but some regions of Paraguay need stronger intervention in terms of health, education, roads and especially drinking water. We have involved the army and we expect to achieve our Millennium Development Goals by the end of this year. The reform agenda has been and will continue to progress satisfactorily. Transparency of information is now becoming a characteristic of our country, and because of this many people from around the world are discovering that Paraguay is a nation with important macroeconomic stability. We also have monetary stability and we are the only country in the region that has not modified its currency for over 70 years. But what would give me greater pride is instead of answering you myself about the favourable economic climate for investors, is for you to ask them yourselves. Let the foreign businesses tell you about their experiences and how happy they are to have decided to come to Paraguay. As a core objective we are seeing investment increase, but I believe that visitors and investors getting the word out is the best tool we have in attracting foreign investment.Before we were in the heart of the continent but this heart was not beating; now we are the beating heart of South America and I consider this one of our greatest achievements. We are working on the brand and image of Paraguay and how we project ourselves to the outside world. Foreign investors have a key role in terms of getting that message out and showing to the world the unique qualities contained in our territory. Paraguay is becoming an important producer of food products for the entire world with great added value. We are fast becoming a logistics hub in the heart of South America. A young country with fresh and innovative leaders. A serious and straightforward country for business. Paraguay is an excellent platform for profitable businesses. This nation offers everything for those who want to come, work, and get the best out of their business, but most important of all is that we are working towards being a country where economic success reaches all of its citizens.

“Before we were in the heart of the continent but this heart was not beating; now we are the beating heart of South America and I consider this one of our greatest achievements”

With relations fully restored with your neighbours, what role do you see for Paraguay within South American affairs?

Paraguay is the centre of South America. We have made great progress in positioning ourselves as a needed partner for the bigger economies. For example, Paraguay is fully integrated into Brazil’s industrial supply chain through our industries such as auto parts and machinery, clothing, toys, plastics and general manufacturing, adding competitiveness to the economy of our major trading partner. Indeed we are positioning ourselves as an excellent manufacturing platform for the region and the world. We are also recognised as an efficient and major logistics hub for river cargo.

What further pivot can we expect towards European and other markets outside of MERCOSUR in the coming years?

Europe is a very important trading partner and a major source of investment. The two most profitable companies in Paraguay in terms of dividend remittances are European. Paraguay is committed to bringing MERCOSUR into a Free Trade Agreement with the European Union and with other regional blocs. We have a unique opportunity as a peaceful commercial bloc that produces so many food products, to become a bread basket for the global economy.

You created a new-look government including many businessmen in your cabinet, what advantages do you see in this make-up?

We are oriented by achieving results for our people. Governments exist to make people’s lives better, that is our vision. I have put together a young, energetic and patriotic cabinet that is focused on their task and without party politics on the agenda. The needs of the Paraguayan people do not have political colours.

What interest have you seen in legislation for public-private- partnerships (PPPs) and what further steps are you taking to ease the way for investors?

Every day I see huge amounts of interest in the opportunity for PPPs here in Paraguay. Our main highway attracted over ten top global infrastructure companies, with seven more attracted by our river dredging project. Our new airport terminal will be a similar story, while for our project for commuter trains we have already pre-qualified 15 companies with global experience. The most important issue when it comes to protection for investors is a country’s track record, and Paraguay has an excellent record over the past 12 years. We are known for stability, credibility, profitability and clear rules of engagement. Private investment has been growing at a good pace and now my administration has doubled the volume of public investment in 2012, and we will soon triple it. We have presented to Congress a law that creates fiscal incentives and tax freezes for up to 20 years depending on the size of the investment. It already has the approval of the lower house and we expect the upper house to follow suit.

What do you see as Paraguay’s future growth drivers and key industries as you look to diversify the economy?

Today some 25% of our GDP is agri-business related, while our services and commercial sectors add up to 50%. Industry is becoming a force and a contributor with 12% and we are seeing a steady growth in this area. We are far from the diversification we are striving to achieve but we are on the right path. I see enormous potential in Paraguay for auto parts manufacturing, food and agri-business, plastics, electro-intensive industries and clothing. Our exports grew by over 50% in manufactured goods under the ‘maquila’ outsourcing regime in 2014.

What do you see as Paraguay’s key advantages when it comes to attracting investment and business?

Paraguay has a wealth of attractions for those who want to work and invest. We have the lowest energy costs in the region flowing from our abundant natural resources, we have seen few labour disputes, and the importance we attribute to attracting foreign investment and making investors comfortable is evident in our low and competitive tax regime. We are a serious and straightforward country, however the biggest attraction we offer is a promising demographic with a young population that is eager to work. We have passed laws to attract investors and we are beating historical records in terms of infrastructure development.

You are not a typical politician, so what made you decide to go into office on the back of such a successful business career?

God and this nation, my country, have given me everything. I had the perception that there was an enormous margin to take on this position and really achieve something positive and do things better than they had been done before. For this, I decided to dedicate myself to Paraguay.